DAWN - Opinion; August 21, 2003

Published August 21, 2003

Scourge of terrorism

By Shamshad Ahmad

THE tale of the 20th century could perhaps be best epitomized in the opening lines of Charles Dickens’ “A Tale of Two Cities” which reads: “It was the best of times, it was the worst of times...” Great economic depression, two great wars, several other wars, invasions, military occupations, oppression, massacres and genocides, exploitation, poverty, misery, hunger and disease, particularly AIDS, are the painful reminders of the last century.

More than one hundred and sixty million people were killed in the 20th century, which is also called by some as the “century of bloodbath”. But there was also a brighter side of that century making it “the best of times” in human history. The positive count includes unprecedented accomplishments in science and technology, upsurge of freedom, democracy and human rights, awakening of masses, spread of knowledge and information, and emergence of globalization.

Today, the question is shall we excel the 20th century in bloodbath and destruction or shall we build upon its political, economic, social and other gains? The 21st century has not started well. We are burdened with the same problems, perhaps in their acutest form. Injustice and oppression continue to breed despair and defiance, which are finding horrible manifestation in an unprecedented level of hatred and violence.

Armed conflicts remain pervasive. Historical grievances, unresolved disputes, territorial claims, ethnic rivalries, communal and sectarian killings, religious differences, and larger socio-economic asymmetry represent today’s “new world disorder” which has produced human tragedies, humanitarian catastrophes, wars of aggression and attrition, massacres and genocides, military occupations, militancy in the name of freedom and justice and a culture of violence.

Terrorism is the new scourge afflicting our world. It is a phenomenon and an evil that transcends all boundaries, and in recent years has affected the political, economic and security environment of all regions, countries and societies. It is a faceless enemy which lurks in the shadows of fear and frustration, breeds on despair and disillusionment, and is fed by poverty and ignorance. It is the product of what UN secretary-general Kofi Annan, in one of his speeches on the UN’s role in fighting terrorism, described as “a broader mix of problems caused by bad government, opportunistic politicians and militant leaders who exploit grievances”.

According to him, when there are no legitimate means of addressing the massive and systematic political, economic and social inequalities, an environment is created in which peaceful solutions often lose out against extreme and violent alternatives.

Unfortunately, in the aftermath of 9/11, the detractors of Islam found an opportunity to contrive stereotypes to malign Islam and to mobilize an attitudinal climate of antipathy against its adherents by focusing obsessively on the religion of the individuals and organizations allegedly involved in terrorist activities. What was being conveniently ignored was the fact that most of the perpetrators of violence were dissident runaways from their own countries and had a political agenda of their own, howsoever misguided and obscurantist it may have been, in pursuing their terrorist activities.

Terrorism will not disappear through campaigns motivated by retaliation and retribution alone. It is a perverse mindset that needs to be treated like a disease. Only a steady, measured and comprehensive approach encompassing both short-term and long-term political, developmental, humanitarian and human rights strategies that focus on the underlying disease rather than the symptoms would bring an enduring solution to this problem.

To address the underlying causes of this menace, the world community needs to build global harmony through mutual understanding and tolerance, promote peace and stability, pursue poverty eradication and sustainable development and ensure socio-economic justice, political freedom, genuine democracy and respect for fundamental rights of people, particularly the inalienable right of self-determination.

War on terror should not remain confined to nabbing or killing of the perpetrators of violence or changing a government in one country or the other. It should in effect be waged at all levels — national, regional and global — against oppression, injustice and instability which fuel hatred and violence.

In combating terrorism, the foremost responsibility lies with national governments which must re-order their priorities and focus on the socio-economic uplift of their societies. People-centred development, not military arsenals, should be their priority. Education must become a strategic need and priority of every developing nation. Home-grown democracy built on pluralism and stable institutions, not regimes parachuted or propped up from outside, would provide the ground for sustained economic growth and social cohesion. Political culture must be freed of despondency and frustration.

In the context of Pakistan, a special effort is needed to purge the society of extremism and obscurantism which have crept into its ranks over the decades of instability and poverty in our region. This is not an easy task but a sustained and persuasive effort is needed not only on the part of the government but also all influential segments of our society.

Instead of always blaming “outsiders” for domestic violence and terrorist incidents, we should have the courage to admit that there is something fundamentally wrong with our own governance patterns. We have been unable to enforce discipline and rule of law. Internal security is the main casualty. Law and order remains an endemic problem and a major weakness of our country. Our borders have been porous for ideological and financial infiltration which for years has fuelled bloody proxy wars on our soil.

There should be no place for violence in Pakistan, not even the one engineered by dogma or theology. There should be no encouragement of militancy under any name or for any cause. Madrassa culture needs to be transformed into a healthy and modern educational medium. This would require serious effort and resources. To address our socio-economic problems, the government must prepare a master plan encompassing both immediate steps and long-term policy ranging from internal security and economic measures to education and social welfare policies in the country.

For the world community, the key challenge of the 21st century lies in managing the magnitude of the political, economic and social inequalities in all segments of humanity and in promoting democracy, peace and the rule of law within and among the states through universally acknowledged norms and principles. Global security environment also needs to be stabilized through consistent peacemaking and peace-building efforts, based on crisis management, conflict prevention and peaceful settlement of disputes in accordance with the modalities prescribed in the Charter of the United Nations.

Conflict prevention must be based on the norms of collective security. The UN as the only universally representative world body must respond to collective challenges through collective action. The respect for the principles of state sovereignty and non-interference in the internal affairs of states must be maintained, although exceptions could be made in situations where people are struggling for self-determination against colonial rule, foreign occupation or alien domination.

An effective early warning system should be evolved with a view to identifying potential areas of conflict or terrorist activity. The UN must, however, rely on accurate, objective, unbiased and verifiable sources of information to assess the situation on the ground and to determine preventive or remedial action.

The UN member-states should be prepared to contribute force for humanitarian interventions, which could prevent or ‘stop’ genocide or atrocities against civilians, with or without the express authority of the Security Council, or of the states or parties concerned. The feasibility of a global peace force to act on the authority of the Security Council or in its absence, of the General Assembly, for maintenance of peace, may be considered. Also, a global police force could be established to intervene in civil conflicts and to help post-crisis stabilization measures.

And finally, no country, however powerful or dominant it might be, should resort to unilateral armed intervention. It violates moral and multilateral imperatives and solves no problems. In confronting global challenges, as has been most recently borne out in Iraq, collective action based on collective interest is the only viable option which must be pursued under the aegis of the UN Security Council.

Discussing multilateral constraint in his book, “Wilson’s Ghost” published two years ago, Robert McNamara advocated “zero tolerance” multilateralism for the US. He was blunt enough to caution that “...in no case should the United States decide unilaterally to intervene. US leaders are not omniscient, even though they sometime act as if they are. Wisdom and local knowledge are essential for successful interventions, and the others with similar concerns may well have more of it than the Americans.

Because armed intervention is a very risky business, we should practice the democratic principles we preach by subjecting our beliefs and inclinations to critical reviews by like-minded allies with similar values and interests”. The lessons in Iraq are clear. The US may have won the war, but may still need UN’s legitimacy and multilateralism to secure peace in the occupied country.

The writer is a former secretary of Pakistan.

The oil spill disaster

By Sultan Ahmed

KARACHI is confronting one tragedy after another these days. If it’s the one caused by the rains which claimed almost 30 lives and destroyed many homes, it is followed by the oil spill with its long term impact on economy, environment and fishermen’s livelihood which is alarming the city now.

In recent years if it was not a tragedy that overwhelmed the city, it is a crisis of one kind or another that affects its life. That can be massive acts of terrorism or sectarian killings or political upheaval that followed the birth of the MQM with its sectarian killings.

The basic problem of the city is the composition of its fast growing population and lack of effective or adequate leadership. No one even knows for sure what is the actual population of the city which was 350,000 at the time of independence with about two thirds of them to leave the country. Now it is 12 or 14 million, or much less as official census figures show. It all depends whether you include the kutchi abadis who at times say they belong to upcountry or to Karachi.

The multiethnic population includes Afghanis, Iranians and Arabs, nationals from the West, Indians, Bangladeshis and even Burmese from the East. The Bengali population is estimated between one to three million and their eagerness to get Pakistani nationality is said to be the main reason for the delay in issuing the new computerized ID card to Pakistani Nationals.

On the other hand there is the dearth of an effective and truly popular leadership and a strong bureaucracy. Initially the Muslim League that founded Pakistan provided the leadership, but that was not indigenous but grafted to suit the political needs of the central leaders. Their weakness was made up one way or other by strong administrators like Mr A.T. Naqvi and later by G.A. Madni and Mr N.M. Khan.

In those days the elections produced a new set of faces every five years when we had the local or provincial elections. Then came the MQM neutralizing the influence of the Jaamat-e-Islami in the city whose mayor Abdul Sattar Afghani was toppled. When the MQM became too powerful the government moved in to split it by promoting the MQM Haqiqi. So the Muhajirs were split between the two MQMs, the Jaamat-e-Islami and several other religious parties. Then came the Shia-Sunni rift and the killing of a number of prominent Shias including Shaukat Mirza, Managing Director of Pakistan State Oil. While the problems of Karachi are too many and increase each day with the arrival of citizens from the upcountry, they do not figure in the population of the city officially. When the census was ordered in the 1980s the population of the city was shown as 5.5 million, when every one was expecting a figure of 8 million. A heated controversy followed. It later transpired, the figure covered only the settled people of Karachi and not the kutchi abadis. Much later the governor of the province at that time, Lt. General Abbasi said that he had been asked to show a low figure for Karachi.

The problem with showing such low figures is that Karachi or Sindh gets a smaller share of the National Finance Commission Award and suffers on that account. While Punjab admits a fall in its population due to migration, a rather corresponding increase in Sindh’s or Karachi’s population is not shown on that account. That means that while Karachi’s population increases and the pressure on the administration mounts it does not have the financial means to solve them. And the ignored and unsolved problems get far worse and eventually the situation becomes explosive.

To add to it, many of the officials who head various departments in the city or the federal government departments come from outside and are not deeply committed to the city. In addition the Karachi Port Trust, PNSC and the Karachi Shipyard have been naval preserves for several decades now.

In the light of the facts above, some of the cavalier statements on the disastrous oil spill being made by the Federal Minister for Communication Senator Ahmed Ali (although be belongs to Karachi) and the Federal Communication secretary Iftikhar Rashid are not surprising.

After some vague explanations and partial answering of questions many fundamental questions remained unanswered, 1) why was such an old ship such as Tasman Spirit with its bad history hired to carry 67,532 tonnes of oil from Iran? 2) who were the insurers and for how much was the ship and its contents insured? 3) Was it the fault of the pilot of the guiding vessel who brought the heavily laden tanker through a low tide and got it stuck where it was. 4) Why was the ship not emptied when it was realized it could not be re-floated. However they managed to remove 19,000 tonnes before the tanker burst, but not before 9000 tonnes had been lost in the sea.

Why was not the dispersant sprayed from the two aircraft ordered later and not early enough? Senator Ahmed Ali talks of the lessons learnt from the tragedy. What are they? He talks of withholding facts in national interest. In fact, national interest demands full disclosure and not suppression of facts and shielding the officials. If they are not guilty of negligence they certainly lacked due diligence or were not really alert or quick to react to the unfolding tragedy.

Does he want to withhold the facts only because KPT and PNSC are under the Navy and he does not want to expose their weaknesses? There is no threat to marine life asserts the minister. Simultaneously the same telecast shows dead fish and turtles and the fish may die for a long time elsewhere.

The Environmental Protection Agency is preparing its own report on the tragedy. Let us hope the full report will be available to the public and not with deletions of the key parts by the government. What the tragedy underscores is, that the top priority of the Defence Housing Authority should be to serve its residents and save them from such tragedies instead of planning more creek cities which promise to create heaven on earth.

A high-powered committee headed by Chief Minister Ali Mohammed Maher has been appointed to deal with the problems and the aftermath. The public demands a high-powered inquiry. Unfortunately in Pakistan such inquiries including judicial inquiries do not produce positive results, more so where the defence forces are involved.

Facts about Aids

THE South African government has stated, for the record, that HIV causes Aids and that anti-retroviral drugs can mitigate its impact. These two facts, long accepted in most of the world, have been the source of bitter controversy in South Africa.

For reasons best understood only by himself, South African President Thabo Mbeki refused for many years to recognize the link between HIV and Aids. Even after grudgingly acknowledging that link, he still refused to accept anti-retroviral drugs as a legitimate part of treatment.

International pressure, domestic activists and the intervention of former President Nelson Mandela appear to have helped him change his mind. The very fact that his government now promises to produce a plan for the distribution of the drugs, to be fully implemented by 2008, represents a breakthrough.

But one statement cannot undo the damage already done. According to the government’s statistics, one in 10 South Africans — nearly 5 million people — are infected with HIV, including one in four pregnant women. By some accounts, the numbers are even higher.

What is needed now is not just acceptance of the disease’s existence but an aggressive assault on Aids — which in turn requires President Mbeki to go much farther in changing South Africa’s medical and political bureaucracy. Just a few days before Mr. Mbeki’s cabinet pronounced itself ready to start using drugs against the epidemic, South Africa’s equivalent of the Food and Drug Administration rejected the use of Nevirapine, a relatively cheap, relatively easily dispensed drug given to pregnant, HIV-positive women to prevent them from passing the disease to their children.

Although used successfully to reduce rates of transmission around the world (including in South Africa) officials questioned one of the studies used to support the drug’s efficacy. Recently, a clause that would have promised prophylactic drugs to prevent victims of sexual violence from contracting HIV was struck from a parliamentary bill. Although not presidential decisions, these measures reflect a tragic lack of national urgency.

As long as South Africa fails to take seriously the medical and scientific evidence concerning the causes and treatments of Aids, there will be terrible consequences across the African continent. Aids is killing people, destroying economies and leaving behind a generation of orphans.

South Africa, with its political influence, its sophisticated medical system and its excellent medical schools, is in a position to lead a continental revolution in the fight against HIV and Aids. It has abdicated this role far too long. —The Washington Post

A foreign policy fiasco?

By Dr Masood-ul-Hassan

THE Pakistan embassy was ransacked in Kabul for the third time last month. The single most hated country these days in Afghanistan, against whom there are continuous accusations, protests and demonstration is none other than Pakistan.

The policy pursued for over two decades in Afghanistan for the sake of “strategic depth” has now turned into “strategic dearth” to such an extent that no Pakistani is welcome on the Afghan soil, while millions of Afghanis are in Pakistan doing independent business all over the country from Karachi to Khyber. The country which gave shelter to over 30 million Afghanis for 20 long years, bore 40 per cent cost of the maintenance of the refugee camps once the international aid dried up after the Russian withdrawal.

It was not simply the material cost; we bore the brunt of the drug, the kalashnikov culture that sprung up and the environmental cost as a result of ecological degradation owing to mass exodus of Afghan refugees. Quite contrary to the international norms they were not restricted to camps, but were allowed access to the labour market and the entire country as a gesture of solidarity and brotherhood and they got spread all over the country, which had its own intangible effects on the whole society.

What do we now get in return is continuous animosity, accusations, protests and demonstrations at all levels? The hostility and animosity exhibited by an ordinary Afghani is not only surprising but baffling particularly, when a vast majority of people in Pakistan have great affection for the Afghan people and have undergone lot of sacrifices to accommodate over 3.5 million Afghans for over two decades.

The credit for this fiasco goes to our establishment, particularly the top brass of the Pakistan army who have been calling the shots since the imposition of first martial law in 1958. In martial law all powers are concentrated in one individual and the institutional arrangements to formulate long and short-term goals for the country are replaced by the sycophants and cronies.

The capacity of these institutions and individuals lacks wisdom, depth, dignity and resolve to view and address internal and external issues from long term and national perspective. The decisions are made and changed not in the interest of the country but to meet the selfish or personal designs of an individual joined by an army of cronies.

Some of the decisions made by this arrangement speak for themselves. Operation Gibraltar in 1965 was carried out with the perception that India will not attack the international border. India just did that and the entire country was plunged into a full-fledged war on the whims of a few individuals, mainly to boost the presidency of Ayub Khan who was badly shaken by the 1964 elections against Mohtarama Fatima Jinnah.

In 1971 Gen Yahya Khan kept waiting for the 7th fleet, which never came and the country was dismembered because he ignored the verdict of the people.

Gen Ziaul haq exploited the name of Islam and Jihad in order to perpetuate his rule with total disregard to the interest of the nation. The country had to pay a heavy price for his decision to join the Afghanistan war. This decision was taken without considering the consequences of such an interference in the affairs of another sovereign country, and was influenced more by his personnel requirement of legitimacy than the interests of the country. An exodus of 3.5 million refugees along with gun-running, drug trafficking, religious and ethnic violence and drug addiction were some of the consequences that engulfed the entire country. The entire social, economic and administrative structure of the country crumbled at the alter of his desire. All the top brass of the army became the warriors of Islam by hobnobbing with the Afghan warlords, offering them all the protocol and facilities at state expenses.

Kargil war was one single episode that completely isolated Pakistan in the world. Kashmir issue did come to the centre stage of the world but with the entire world opinion tilting towards India.

The events following 9/11 forced Gen Musharraf to make some fundamental changes in our Kashmir and Afghanistan policies, with submission to the requirements of the American demands. To some extent it appeared that this time around the Americans may show some regard to the support that Pakistan has extended against the war on terrorism, but the bill that has been sent to the Congress for approval and the conditionality attached with it reveals that their national interest is the only guiding principle for the friendship in the international affairs.

These are some of the examples of decision-making, when wrong people make decision for which they are not trained or the institutional arrangements are not allowed to function. This has been the tragedy of Pakistan, which do not seem to end.

Al Qaeda is one organization, which has been discovered by the Americans, no one has seen any evidence of the existence of this organization except the information released by the intelligence agencies of the US. This organization, if it exist has done no harm to Pakistan till now, but the president and his intelligence organizations have taken upon themselves to wage a war against this organization. All the people so far accused of being members of this organization have been apprehended by us. We must not repeat the mistake that we committed by allying ourselves with the Taliban. Strategic alliance with the Taliban was the most glaring mistake committed by Pakistan. The people remotely associated with the Taliban and knew Afghan history warned the government to refrain from going too far in trusting the Taliban militia to run a stable government in Afghanistan. It was a myth that they controlled 90 per cent of the area, again manufactured by the Pakistani establishments to justify its support to the Taliban militia. This 90 per cent control remained 90 per cent throughout their five-year stay in power. We gave full support to them and alienated all other groups of the Northern alliance.

A careful analysis of the whole period would show that all through these years our foreign policy was not guided by the strategic interests of the country but was linked to the personal agenda of the rulers who were inherently weak. Neither we were fortunate enough to have people of substance in the establishment (both military and civil) who could stand up and resist such blatant disregard of the interest of the country nor did we have the institutional and consultative arrangements, which could have guarded the interests of the nation.

The Quaid-i-Azam Mohammad Ali Jinnah, the only statesman that this country had, had shown the way to live with our western neighbour. In his maiden visit to the Durand line in early 1948, the first order that he passed was to vacate all the cantonments on the Pak-Afghan border and an operation “Cruzan” was launched to vacate these garrisons from Sheela Bagh in the south to Daroosh in the north in Chitral namely Loralai, Zhobe, Wana, Razmak and Mir Ali, which are still lying vacant. He wanted to have a soft border with no intention to interfere in their internal affairs. That was the message and the guidelines but no one bothered to take the cue. Neither do we have the institutional arrangements to carefully analyze such issues in the light of the past experience and visualize what could happen in the future.

This foreign policy fiasco on Afghanistan is a reminder of the total failure of the functionaries and the agencies responsible for formulating national policies. They overlooked the guidance given by the Father of the Nation for non-interference in other countries’ affairs and at the same time were not strong and courageous enough to resist the temptations to please their masters for petty gains. This is a sad commentary on the quality of the people, who were to plan policies for the country.

The writer is a retired colonel of the Pakistan army.

Population as the criterion: Finance commissions-VI


THE national finance commission of 1974 was the second commission, which was established under a constitution — this time, the 1973 Constitution. The secretary of the commission continued to function as joint secretary (budget) and additional secretary as a section officer in the finance division. And secretary-general (finance and economic coordination) was nominated as one of the Commission’s members.

While acknowledging the essential need for preserving the financial soundness and strength of the federal government, the commission was cognizant of the necessity of making the provinces financially viable units. The commission also recognized the fact that the federal government had far more scope and capacity for raising resources by taxation than the provinces.

The commission came to the conclusion that there was ample justification for a larger allocation of the divisible revenues to the provinces, and recommended that the vertical distribution should be that 80 per cent of the net proceeds of the shareable taxes and duties (export duties on cotton, taxes on sales and purchases; and taxes on income, including corporation tax) was assigned to the provinces and, 20 per cent be left with the federal government.

As regards the horizontal distribution among the provinces, the commission recommended, “As for inter-se shares of the provinces, the commission, after full examination of the various formulas, held the view that these should be determined on the basis of population. It was felt that this arrangement would be both democratic and equitable, and should cause no controversy. It will put all the provinces on equal footing”.

The allocable share of the provinces, the commission recommended, should be distributed in the percentage of their respective population, namely, Punjab — 60.25 per cent; Sindh 22.50 per cent; NWFP — 13.39 per cent; and Balochistan — 3.66 per cent.

The Commission’s report was laconic, brief and abrupt: One does not get any idea how “full examination of the various formulas” was carried out by the commission. Leaving aside AGN Kazi, secretary-general finance (who was a member of the commission), if “democrats” like federal finance minister Rana Hanif Khan, Mohammad Hanif Ramay, Ghulam Mustafa Jatoi, Nasrullah Khan Khattak, Sardar Ghaus Baksh Raisani, and Saifullah Khan Paracha “agreed” that the distribution of resources on population basis was “both democratic and equitable”, it would mean that all other formulas are/were inequitable and undemocratic.

The abrupt conclusion by the commission that population would be the basis for distribution reminds one of an English saying: “Then might you think I had swelled with the mountains, and brought forth a mouse”. All the work done by the federal and provincial governments to produce audited actuals in respect of revenue receipts and non-development revenue expenditure, and capital receipts (along with breakdown of receipts and non-development disbursements) for the years 1970-71 to 1974-75; gross revenue receipts of the federal government (from 1970-71 to 1974-75); revenue receipts (excluding federal assignments) for the same period; projection of revenue receipts and non-development expenditure of all the governments for 1975-76 to 1979-80; fiscal transfers to the provincial governments from 1970-71 to 1974-75, and their projection for the period 1975-76 to 1979-80; details of locational investments, etc does not have linkage with the basic recommendation, made by the commission.

However, some of the points raised in a couple of meetings of the commission may be highlighted. In one meeting, AGN Kazi reviewed the criteria advanced by other members and said that of all the four bases, namely, population, incidence, relative backwardness and need, population was an element on which there had been greater agreement in the past and was even then accepted as basic element by most of the members!

In the same meeting, P.K. Shahani, a member of the commission (from Sindh) wanted to know if the federal finance secretary (who was not a member of the commission but had been attending the meetings of the commission) was expressing the views of the federal government or those of his own in advancing his formula. The secretary replied that he was discharging his duty as “an expert” called upon to assist the commission! ! When parties to a cause become judges, such a queer situation would arise.

After five years, the chief martial law administrator (martial law was imposed in 1977) appointed a national finance commission in February 1979, and one of the terms of reference was to make recommendations as to the distribution between the federation and the provinces of the net proceeds of the following taxes: (i) taxes on income, including corporation tax; (ii) taxes on sales and purchases of goods imported, exported, produced, manufactured and consumed; (iii) export duties on cotton; and (iv) excise duty on tobacco and tobacco manufactures.

This commission did not submit a formal report, but it was considered necessary that the results of 1981 population census be reflected in the distribution of the provincial shares of the federal divisible taxes. A Distribution of Revenues Order 1983 was issued, and made effective from July 1, 1983. The distribution was on the basis of population, the vertical provincial share remaining the same. Accordingly, Punjab received 57.97 per cent, Sindh 23.34 per cent, NWFP 13.39 per cent, and Balochistan 5.30 per cent.

After the induction of an elected government in March 1985, the national finance commission was constituted in July 1985 to make recommendations, among other things, as to the distribution between the Federation and the provinces of the net proceeds of (i) taxes on income including corporate tax; (ii) taxes on sales and purchases of goods imported and exported, processed, manufactured or consumed; (iii) export duties on cotton; and (iv) excise duty on tobacco manufactures.

Till October 26, 1988, the commission did not submit its recommendations! A caretaker government had been inducted after the dissolution of the National Assembly and removal of Junejo government. The caretaker government did not consider it proper to take up the issue, as it was not expected to take long-term policy decisions.

The 1990 national finance commission, which was established in late July 1990, did not function as Benazir Bhutto’s government was dismissed in the first week of August. After an elected government came into power in November 1990, the composition of the commission was revised but there was no change in the terms of reference, which among other items, were to make recommendations, as to the distribution between the federation and provinces of the net proceeds of (i) taxes on income, including corporate tax; (ii) taxes on sales and purchases of goods imported, exported, processed, manufactured or consumed; (iii) excise duty on tobacco and tobacco manufactures, and sugar; and (iv) export duties on cotton. The commission was also asked to examine the question whether and in what manner, the net proceeds, collected by the Federal Government (a) of royalties on crude oil, and (b) of surcharge on natural gas be paid to the provinces concerned.

Notwithstanding the enlarged divisible pool (by including excise duty on tobacco and tobacco manufactures, and sugar; and royalties on crude oil, and surcharge on natural gas), the commission recommended to retain the old formula (of 1975) for the vertical distribution of divisible taxes between the Federation and the provinces, on the basis of 20 per cent for the Federation, and 80 per cent for the provinces. It also recommended that the Provincial shares be distributed to the provinces on the basis of their respective population. The ratios finally adopted were: Punjab 57.88 per cent; Sindh 23.28 per cent; NWFP 13.54 per cent, and Balochistan 5.30 per cent.

Another recommendation was that the net proceeds of development surcharge on natural gas be transferred to the provinces on production basis at well-heads. Similarly, the net amount of royalty from crude oil was to be paid to the provinces according to production in each province.

As stated earlier, the duty of the national finance commission is limited to making recommendations on three subjects, and on any other matter relating to finance, referred to it by the president. This means that the terms of reference of the commission have to be framed by the president, within the framework of the Constitution, and secondly, no other authority can refer any matter to the commission.

It is interesting that the Commission was asked by the council of common interests, on July 12, 1991 whether the net proceeds of hydel power profits due to the provinces concerned, be paid by the federal government or the generating agency. Complying with the request, the commission replied that it should be paid by the agency, but it should be guaranteed by the federal government. This sort of reference to the commission is not covered by the Constitution, and secondly, the subjects of hydel power profits, as excise duty and royalty on natural gas, are not within the jurisdiction of the finance commission. All this was extra-constitutional.

To be concluded



Budget and politics
Updated 14 Jun, 2024

Budget and politics

PML-N, scared of taking bold steps lest it loses whatever little public support it has, has left its traditional support — traders — virtually untouched.
New talks?
14 Jun, 2024

New talks?

WILL this prove another false start, or may we expect a more sincere effort this time? Reference is made to the...
A non-starter
14 Jun, 2024

A non-starter

WHILE the UN Security Council had earlier this week adopted a US-backed resolution calling for a ceasefire in Gaza...
Budget for stabilisation
Updated 13 Jun, 2024

Budget for stabilisation

The proposed steps lack any “disruptive policy changes", especially to "right-size" the govt, and doubts remain on authorities' ability to enforce new measures.
State of the economy
13 Jun, 2024

State of the economy

THE current fiscal year is but another year lost. Going by the new Pakistan Economic Survey, which maps the state of...
Unyielding onslaught
Updated 13 Jun, 2024

Unyielding onslaught

SEVEN soldiers paid the ultimate price in Lakki Marwat on Sunday when their vehicle was blown up in an IED attack,...